Strong apartment demand fuels property price rise

Property prices in Cyprus rose during the third quarter of 2021, a report by the Central Bank of Cyprus released on Friday revealed.

According to the central bank’s quarterly report on Residential Property Price Indices, the price increase was primarily driven by apartment property sales.

At the end of the third quarter, property prices rose by 0.5 per cent over the second quarter, having risen by 0.3 per cent the quarter before that.

Meanwhile, the year-on-year increase during the third quarter was 1.2 per cent, 0.9 per cent higher than the yearly increase recorded during the second quarter.

House prices exhibited different tendencies when compared to apartments, with the former falling in value in certain areas around Cyprus, both when compared to the previous quarter, as well as the corresponding period from the previous year.

Across all districts, house prices fell by 0.3 per cent year-on-year, while they increased by the same margin quarter-on-quarter, mainly due to values rising in Larnaca and Paphos.

Conversely, apartment prices increased by 1 per cent on a quarterly basis, while they jumped by a massive 4.5 per cent year-on-year. This reaffirms the strong demand for apartments in Cyprus over the past two years.

According to the central bank’s property market analysis, the key reasons for the pronounced preference for apartments include subsidies for new homebuyers, rising rental prices, as well as the increase in the cost of construction materials.

Based on a report by the Cyprus News Agency (CNA), which cites unofficial sources in the property market, demand for properties by foreign investors has also cooled down.

The report adds that foreign investors are now looking at lower value properties when compared to the year before, which is something that has been attributed to the termination of Cyprus’ citizenship by investment programme.

In terms of a district-by-district breakdown, the data by the central bank shows that residential property prices recorded a quarterly increase in Limassol (0.1 per cent), Larnaca (1.7 per cent), Paphos (1.6 per cent) and Famagusta (0.6 per cent). Residential property prices in Nicosia remained stable.

On annual basis, residential property prices rose in Limassol (2.9 per cent), Larnaca (2.9 per cent) and Paphos (1 per cent), while they fell in Nicosia (1.2 per cent) and Famagusta (0.7 per cent).

According to the central bank, rising residential property values are primarily the result of increased domestic demand, with foreign interest stabilising.

Regarding the current demand by foreign buyers, this has been partially driven by the government’s international headquartering initiative, a move which has resulted in a number of foreign technology companies moving to Cyprus.